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Calif.’s SB 939 Fails in Committee

The bill would have allowed some commercial tenants to renegotiate lease deals

Photo Via Commercial Observer: Senator Scott Wiener Above


JUNE 18, 2020

A contentious bill to extendCalifornia’s eviction moratorium and allow some tenants to trigger lease renegotiations was defeated today,with commercial landlords throughout California breathing a sigh of relief. 

The senate appropriations committee did not pass Senate Bill 939, despite recent changes made by the authors, Senator Scott Wiener and Senator Lena Gonzalez, which included limiting the moratorium length and eliminating the provision that would have allowed tenants to break the lease if a new one was not agreed upon within 30 days, which was the most contested aspect of the proposal.

The bill would have enacted a moratorium on commercial evictions for businesses and nonprofits with 500 or fewer employees during the coronavirus state of emergency. SB 939 would have also allowed tenants in the hospitality sector to trigger renegotiations with landlords to modify existing leases if they lost more than 40 percent of their revenue or if they will operate at 25-percent reduced capacity due to extended social distancing requirements and shelter-in-place orders. 

Wiener and Gonzalez introduced the bill in hopes of preventing the potential for widespread closures of restaurants, cafes, bars, entertainment venues, and other businesses most affected by the economic shutdowns. In a joint statement today, the senators said the Legislature “missed a major opportunity to throw a lifeline to small businesses and nonprofits by helping them survive the COVID-19 economic collapse.”

“California faces the very real prospect of a mass extinction event for small businesses and nonprofits — a result that will undermine our economic recovery and inflict countless boarded up storefronts on our neighborhoods,” the statement read. “SB 939 was a good faith effort to help them survive. The Legislature and Governor (Gavin Newsom) have a responsibility to take affirmative steps to help our small businesses and nonprofits.”

“If SB 939 isn’t the answer, then we need to come up with other answers. Inaction simp

ly isn’t tenable, given the consequences we face. We will continue to do everything in our power to step up for these economic engines.”

The bill was initially proposed as a statewide moratorium that would prevent landlords from evicting businesses and nonprofits that can’t pay rent during the coronavirus emergency. But it was amended in May to give some businesses that were negatively impacted by coronavirus the chance to renegotiate the lease, and subsequently break it if the landlord did not agree. 

It was met with widespread opposition from landlord advocates and groups around the country. Land use attorneys and landlord associations said it would “upend” leases throughout California, and criticized the proposal for putting the onus on landlords to take the financial liability for the economic downturn. The California Business Properties Association (CBPA) said SB 939 could “cause a financial collapse.”

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